On December 30, 2020, the Oxford-AstraZeneca vaccine was approved for use in the UK. On that date, the vaccine’s manufacturer, AstraZeneca, progressed through the additional development procedures necessary to gain approval in the USA. Throughout 2021, management incurred the following development costs in the process to obtain the approval of the US Food and Drug Administration (FDA):

Costs	Amount
Providing safety information for review to FDA	$1,600,000
Designing vaccination containers in line with FDA’s requirements	$17,000,000
Cost of personnel responsible for administrating the vaccine in the USA	$6,000,000
Cost to educate its sales force and perform market research in the USA	$15,000,000

Based on your expertise in IAS 38:

1. Advise AstraZeneca on whether or not the development costs spent in 2021 meet the criteria for capitalization under IAS 38

2. Record the journal entries at the end of 2021

Answer rating: 100% (QA)

As per IAS 38 Expenses incurred before the establishment of technichal feasibility incurred on resea... View the full answer